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Of Hints, Cheats, and Walkthroughs – The Australian Consumer Law, The Digital Economy, and International Trade
By Dr Benjamin Hayward
Those who enjoy playing video games as a pastime (though certainly not in the competitive esports environment) might take advantage of different forms of assistance when they find themselves stuck. Once upon a time, they might have read up on tips and tricks printed in a physical video game magazine. These days, they are more likely to head online for help. They might seek out hints – tidbits of information that help point the gamer in the right direction, but that still allow them to otherwise work out a solution on their own. They might use cheats – which allow the gamer ‘to create an advantage beyond normal gameplay’. Otherwise, they might use a walkthrough – which, as the name suggests, might walk a player through the requirements of perhaps even ‘an entire video game’.
Despite initial appearances, these definitions do more than just tell us about recreation in general, and gaming culture in particular. They also help us understand the state of play in relation to the Australian Consumer Law’s application to the digital economy, and, in turn, the ACL’s implications for international digital economy trade.
This video game analogy is actually very apt: gaming set the scene for recent litigation confirming the ACL’s application to off-shore video game vendors. In the Valve case concerning the Steam computer gaming platform, decisions of the Federal Court of Australia and (on appeal) its Full Court confirmed that reach, via interpretation of the ACL’s s 67 conflict of laws provision. The High Court of Australia denied special leave for any further appeal. In the subsequent Sony Europe case, concerning the PlayStation Network, liability was not contested. On the other hand, there was a live issue in Valve – at least at first instance – as to whether or not video games constitute ‘goods’ for the purposes of the ACL’s consumer guarantees. The ACL’s statutory definition of goods includes ‘computer software’. Expert evidence, not contested and accepted by the Federal Court, treated computer software as equivalent to executable files; which may work with reference to non-executable data, which is not computer software in and of itself.
Understanding the ACL’s definition of ‘goods’ has significant implications. The ‘goods’ concept is a gateway criterion: it determines whether or not the ACL’s consumer guarantees apply, and in turn, whether it is possible to mislead consumers about the existence of associated rights. So far as digital economy trade is concerned, case law addressing Australia’s regular Sale of Goods Acts confirms that purely-digital equivalents to traditional physical goods are not ‘goods’ at common law. Any change to this position, according to the New South Wales Supreme Court, requires statutory intervention. Such intervention did occur when the Trade Practices Act 1974 (Cth) transitioned into the Competition and Consumer Act 2010 (Cth). Now, ‘computer software’ constitutes a statutory extension to the common law definition of ‘goods’ that would otherwise apply.
It is against all this context that a very recent decision of the Federal Court of Australia – ACCC v Booktopia Pty Ltd [2023] FCA 194 – is of quite some interest. Whilst most of the decision is uncontroversial, one aspect stands out: the Court held, consistently with Booktopia’s admission, that eBooks fall within the scope of the ACL’s consumer guarantee protections. This finding contributed to an AUD $6 million civil pecuniary penalty being imposed upon Booktopia for a range of breaches of the ACL. But is it actually correct? Whether or not that is so depends upon whether the statutory phrase ‘computer software’ extends to digital artefacts other than traditional desktop computer programs. There is actually good reason, based upon the expert evidence tendered and accepted in the Valve litigation, to think not.
So what does the Booktopia case represent? It could be a hint – an indication that will eventually lead us to a fully-explained understanding of the ACL’s wide reach across the digital economy. In this sense, it might be a pointer that helps us to eventually solve this interpretative problem on our own. Or it could be a cheat – a conclusion possibly justified in the context of this individual case given Booktopia’s admissions, but not generalisable to the ACL’s normal operation. Either way, given the ACCC’s expressed view (not necessarily supported by the ACL’s actual text) that ‘[c]onsumers who buy digital products … have the same rights as those who shop in physical stores’, what we really need now is a walkthrough: a clear and reasoned explanation of exactly what ‘computer software’ actually means for the purposes of the ACL. This will ensure that traders have the capacity to know their legal obligations, and will also allow Parliament to extend the ACL’s digital economy protections if its reach is actually limited in the way that my own scholarship suggests.
All of this has significant implications for international trade, as ‘many transfers’ of digital assets ‘are made between participants internationally’. The increasing internationalisation and digitalisation of trade makes it imperative that this ambiguity be resolved at the earliest possible opportunity. Since, in the words of the Booktopia judgment, ACL penalties ‘must be of an appropriate amount to ensure that [their] payment is not simply seen as a cost of doing business’, traders – including international traders – do need to know with certainty whether or not they are subject to its consumer protection regime.
Dr Benjamin Hayward
Senior Lecturer, Department of Business Law and Taxation, Monash Business School
Twitter: @LawGuyPI
International Trade and International Commercial Law research group: @MonashITICL
The Fourth Private International Law Conference for Young Scholars in Vienna
Written by Alessa Karlinski and Maren Vogel (both Free University Berlin).
On February 23rd and 24th, 2023, young scholars came together at the Sigmund Freud University, Vienna, to discuss different views on private international law under the theme of “Deference to the foreign – empty phrase or guiding principle of private international law?”. Continuing the success of the previous three German-Speaking Conferences of Young Scholars in PIL from previous years in Bonn, Würzburg and Hamburg, this year’s conference was hosted in Austria by Martina Melcher and Florian Heindler who organized the event together with Andreas Engel, Katharina Kaesling, Ben Köhler, Bettina Rentsch, Susanna Roßbach and Johannes Ungerer. Read more
The Dutch Supreme Court on how to deal with the CISG on appeal (Willemen Infra v Jura)
On 24 February 2023, the Dutch Supreme court has ruled in the case Willemen Infra v Jura, ECLI:NL:HR:2023:313. The ruling clarifies the scope of the Dutch courts’ duty to apply the CISG (UN Convention on Contracts for the International Sale of Goods, 1980) ex officio on appeal. The Dutch appellate courts shall not review of their own motion whether the first instance court had to apply the CISG to the dispute, if the question of governing law was not the subject of parties’ objections on appeal and thus got “beyond the parties’ dispute”.
Facts
The facts of this case related to a sale of gutters by a Dutch seller to a Belgian buyer. The gutters were to be used for the renovation of a runway at Zaventem airport. According to the seller’s general terms and conditions, the disputes were to be resolved before a Dutch court on the basis of Dutch law.
After the start of performance, the buyer had reasons to assume that that the seller was unable to timely supply the products of the required quality. The buyer refused to take all the purchased gutters.
Proceedings
The seller disagreed and claimed damages for the loss of profit caused by the breach of contract. In the proceedings, the buyer submitted a counterclaim, invoking partial avoidance of contract and, alternatively, nullity of contract due to vitiation of consent. The buyer submitted namely that it had concluded the contract based on misrepresentation relating to the products’ quality (the certificates which the products should have) and the delivery time.
The seller relied on both the CISG and Dutch law in its written submissions, including the statement that the choice for Dutch law in the general terms and conditions should be interpreted as excluding the application of the CISG. During the oral hearing, both parties referred to Dutch law only (see on this the Conclusion of the Advocate General, at [3.4]). The first instance court ruled as follows in relation to applicable law: ‘According to the [seller], the contract is governed by Dutch law. (…) ‘The court contends that [the buyer] also relies on Dutch law in its arguments, and thus follows [the seller’s] reasoning. The court follows the parties in this and shall apply Dutch law.” (the formulation is quoted in Willemen Infra v Jura at [4.3.1], compare to Advisory Council’s Opinion nr 16). The court has then applied the Dutch civil code, not the CISG, to the dispute.
The seller appealed against the decision, but not against the applicable law. Nevertheless, the appellate court considered of its own motion, whether the contract was governed by the CISG. It ruled that the contract fell under the CISG’s scope; the Convention was directly applicable on the basis of article 1(1)(a) CISG, as both Belgium and the Netherlands are Contracting States to CISG. Furthermore, the parties to the dispute have not explicitly excluded the CISG’s application based on article 6. The appellate court has applied the CISG to the contractual claim, and Dutch law – to the claim relating to the vitiation of consent, as this matter falls outside the Convention’s scope. The buyer has labelled the application of the CISG ‘surprising’, because no claim in appeal targeted applicable law.
In cassation, the Dutch Supreme has ruled that applicable law was indeed “beyond the parties’ dispute” on appeal. Therefore, the appellate court was neither free to determine applicable law anew nor free to apply CISG of its own motion (Willemen Infra v Jura at [2.1.2]- [3.1.6]).
CISG and procedural ordre public?
The ruling is logical from the point of view of civil procedure. Appellate review follows up on – and is limited by – the points invoked on appeal. Issues “beyond the parties’ dispute” are not reviewed, unless these issues fall under the rules of procedural ordre public, which the appellate courts must apply of their own motion. While there is no unanimously accepted definition of the Dutch procedural ordre public, the cassation claim explicitly suggested that ‘the CISG is not of ordre public’ (see Conclusion of the Advocate General, at [3.3.]). Whereas this element of the cassation claim has been satisfied, neither the Advocate General nor the Court have engaged with the discussion whether procedural ordre public covers direct application (or applicability) of the Convention’s uniform substantive sales law, even if it would be confined to establishing whether the parties have opted-out the CISG based on its article 6.
News
AMEDIP’s upcoming webinar: The Inter-American Court of Human Rights’ judgment – The case of Córdoba v. Paraguay relating to international child abduction (14 March 2024 at 13:00 Mexico City time) (in Spanish)
The Mexican Academy of Private International and Comparative Law (AMEDIP) is holding a webinar on Thursday 14 March 2024 at 13:00 (Mexico City time – CST), 20:00 (CET time). The topic of the webinar is the Inter-American Court of Human Rights’ judgment in Córdoba v. Paraguay, a case relating to international child abduction, and will be presented by a panel of experts in different fields (in Spanish, see poster). This judgment will be discussed from the following perspectives: State responsibility, Private International Law, human rights law and legal argumentation.
Giustizia consensuale No 2/2023: Abstracts
The second issue of 2023 of Giustizia consensuale (published by Editoriale Scientifica) has just been released, and it features:
Giuseppe Trisorio Liuzzi (Professor at the Università degli Studi di Bari “Aldo Moro”), La composizione negoziata. Una soluzione consensuale della crisi d’impresa (The negotiated settlement. A consensual solution to the business crisis; in Italian)
DIGI-GUARD – Webinar on the Evidence Regulation (in Dutch): 27 March 2024
Maastricht University is organising a webinar on the Evidence Regulation that will take place on Wednesday 27 March 2024 in Dutch. More information is available here.
This event is being organised within the framework of the DIGI-GUARD project, which is co-funded by the European Union under the JUST-2021-JCOO program and which stands for Digital communication and safeguarding the parties’ rights: challenges for European civil procedure. Read more